Cash prize on head to lift Tempo

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Tempo Services' new chief executive Craig Higgins has been set the challenge of lifting the troubled cleaning outfit's share price by a third within the next three years in return for a chunky swag of cash.

The company yesterday announced Mr Higgins would receive a fixed remuneration package of $375,000 a year, plus a $100,000 bonus if he meets "target performance criteria" at the end of his first year.

As part of his long-term incentive package, Mr Higgins has been handed 500,000 options at an exercise price of 96c a share and strike price of $1.28.

In other words, if Tempo's share price hits $1.28, Mr Higgins could make a $160,000 profit.

Tempo shares, unchanged at $1.02, are down 37 per cent on the year and well down from their 2002 high of $3.15.

Mr Higgins will be granted another 500,000 options on June 30 2005, on the same performance hurdles. That is, if he can raise the company's share price by 33 per cent in three years.

Neither Mr Higgins nor Tempo founder John Schaeffer, who will still receive his $450,000 to $500,000 package each year, was available for comment yesterday.

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"Nobody's going to be talking about it. I think the announcement stands on its own," said Anthony Tregoning, of the communications company FCR.

"All I can say is, 'Nobody will talk to anybody'," he said, referring to the company's new approach in dealing with the media.

Despite handing the day-to-day running of Tempo to Mr Higgins last month, Mr Schaeffer has held onto his title as executive chairman and his pay package.

When the former Tempo chief financial officer took the helm on June 30, he conceded the market had lost confidence in the company's "numbers and the reporting of them". Tempo recently was forced by its auditor to re-state first-half net earnings from $1.74 million to $42,000.

But despite having its $130 million a year NSW schools cleaning contract extended to October next year, analysts remain sceptical on the cleaning company's outlook, given it comes head-to-head with many competitors who operate on a cash basis (i.e., pay no tax).

There are also worries the cleaning group's margins will continue to worsen every time it renegotiates key contracts.

"The strategic decline of the business is unstoppable. All over the world, cleaning businesses have either gone bankrupt or into remission," one analyst said.

The key hope for Tempo is the flagged sale of its security business, Securitas 4, valued about $60 million. Proceeds from its sale are seen as vital for repaying Tempo's debts, despite its recently raising $14 million in a convertible note issue to pay off debt.

After recently selling 532,000 shares to meet his own debts, Mr Schaeffer said he had no plans to sell down his 27.6 per cent stake in the company any further.